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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 2: my co host Matt Miller.

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Speaker 1: Every business day we bring you interviews from CEOs, market pros,

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Speaker 1: and Bloomberg experts, along with essential market movin news.

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Speaker 2: I'm the Bloomberg Markets Podcast called Apple Podcasts or wherever

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Speaker 2: you listen to podcasts, and at Bloomberg dot Com Slash podcast.

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Speaker 2: Thank everybody on their yearhead twenty twenty three, we're saying

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Speaker 2: the reopening of China was going to be a major,

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Speaker 2: major play. It doesn't feel like it's really played out.

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Speaker 2: So you know the question is kind of what happened

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Speaker 2: and where do we go from here? Julie, let's say

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Speaker 2: she joined as she covers all the emerging markets for

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Speaker 2: Bloomberg News. She's based in South Paolo, Brazil. Julia, Again,

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Speaker 2: the China call seemed like a reasonable call, seemed like

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Speaker 2: an easy call to make a year ago.

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Speaker 3: What happened, and it was a total consensus call.

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Speaker 4: Right.

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Speaker 3: We've had Goldman, Morgan, Stanley, Bank of America, everybody saying,

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Speaker 3: you know, China's going to reopen and kind of be

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Speaker 3: a wave that lifts all boats and it's super positive

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Speaker 3: for emerging markets. And what you ended up seeing was

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Speaker 3: the exact opposite, Right, China has been a drag on

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Speaker 3: emerging markets as a whole. If you look at it,

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Speaker 3: the EM index, which is very very heavy China, it's

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Speaker 3: about thirty percent China waiting. It's down fifteen percent, underperforming

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Speaker 3: US stocks by the most and I think thirty five

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Speaker 3: years or something. If you strip China, it's up by

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Speaker 3: the most in four years, by about the same amount.

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Speaker 3: So it ended up being a problem for those calling

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Speaker 3: for the decade of emerging markets or you know, the

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Speaker 3: beginning of a massive rally in EM particularly because of China,

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Speaker 3: and it just all the hopes that with the COVID

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Speaker 3: restrictions easing, it would lift everything, and it.

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Speaker 5: Just didn't happen.

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Speaker 6: And that's why, for example, we're just getting a call

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Speaker 6: out of Goldman can allow over there had a global

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Speaker 6: currency rates Emerging markets in general saying look now think

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Speaker 6: about EM and em X China going forward.

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Speaker 5: It feels like that's right.

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Speaker 3: It's a theme we keep seeing. We saw a couple

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Speaker 3: of weeks ago the em X China ETF.

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Speaker 5: Just surging in inflows.

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Speaker 3: It's now bigger than the inflows are bigger than for

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Speaker 3: the China ETF, which a few years ago was fifty

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Speaker 3: times bigger than the X China ETF. So you're seeing

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Speaker 3: a lot of money flow out of China and all

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Speaker 3: acid classes and go. And then it depends on the call,

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Speaker 3: but you're seeing Latin America benefit. You're seeing a lot

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Speaker 3: of India flows, a lot of money managers calling for

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Speaker 3: you know, the growth prospects of India and the reforms,

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Speaker 3: and just money just keeps flowing out of China.

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Speaker 2: So, you know, Julie, I wonder what EM investors are

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Speaker 2: saying today because to me, as you mentioned, it's a

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Speaker 2: big part of the MSCI see kind of have to

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Speaker 2: be there, but to me it feels almost uninvestable. This

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Speaker 2: quote unquote China risk where the government can come in

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Speaker 2: and just really recavoc on my business. I think about

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Speaker 2: Ali Baba, which is kind of the IBM of China.

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Speaker 2: It just took Ali Baba out to the woodshed. What

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Speaker 2: are investors saying about the ability to invest in China

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Speaker 2: these days?

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Speaker 3: And what you see a lot too is the is

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Speaker 3: the surprises, right. I think the property crisis was a

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Speaker 3: big kind of nobody saw coming in. It wiped out

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Speaker 3: seventy billion of value, so it is harder to invest in.

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Speaker 3: What you're seeing from what hearing from investors a lot

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Speaker 3: is the gauges that we usually look at. So the

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Speaker 3: MSCIM for stocks, it's kind of losing its place as

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Speaker 3: a benchmark just because you have to look at China

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Speaker 3: and ex China, and because this index is so heavy,

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Speaker 3: it's kind of not representative of what's happening in emerging

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Speaker 3: markets where you're seeing a broad rarely once you discount

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Speaker 3: the thirty percent that's China.

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Speaker 6: I mean, just look at what happened on Friday of

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Speaker 6: last week. With the gaming sector tencent down twelve percent.

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Speaker 6: You saw NETS is down sixteen percent in the ADR training,

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Speaker 6: I mean extraordinary bait and switch. It felt like once

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Speaker 6: again in terms of the overall view of gaming and

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Speaker 6: whether or not you're going to be having to be

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Speaker 6: charged for an adult using the gaming section, in particular

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Speaker 6: when you're making in app purchases and the like.

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Speaker 5: And then of course later.

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Speaker 6: China approves one hundred and five new video games on

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Speaker 6: Monday to try and sort of calm the concerns that

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Speaker 6: it immediately rifled. So it does feel as though ultimately

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Speaker 6: people are feeling very misguided by what happens with China.

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Speaker 5: Ultimately, therefore, where do they invest?

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Speaker 6: Is there any new country that we single out overall?

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Speaker 6: Is there a viewpoint that you need to be elsewhere?

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Speaker 3: Julia at the moment, I think the most consensus call

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Speaker 3: at the moment is India.

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Speaker 5: It's what we keep hearing from everyone.

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Speaker 3: You have to invest in India. Saudi Arabia comes up

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Speaker 3: a lot, as does Latin America. Brazil has been cutting rates,

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Speaker 3: Chile has been cutting rates and kind of giving a

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Speaker 3: boost to markets. Mexico is another destination. It's close to

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Speaker 3: the US, we have a lot of companies moving factories

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Speaker 3: into Mexico, which is a boom to the economy. So

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Speaker 3: those are the geographies that we're hearing most about while

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Speaker 3: money managers leave China, kind of leave it alone for

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Speaker 3: a little bit, Julia, let.

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Speaker 5: Change so great to have some time with you.

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Speaker 6: You really appreciate you dialing in from Latin America or

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Speaker 6: of course based over there, thinking all things of managing

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Speaker 6: editor for the EM at Markets Americas.

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Speaker 7: You're listening to the team can't live program Bloomberg Markets

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Speaker 7: weekdays at ten am eastering on Bloomberg dot com, the

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Speaker 7: iHeartRadio app and the Bloomberg Business app, or listen on

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Speaker 7: demand wherever you get your podcast.

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Speaker 2: Thy Art Shamali, CEO and founder of Greenwich Media Strategies,

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Speaker 2: Gard thanks so much for joining us here. I don't

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Speaker 2: know where to start in that part of the world.

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Speaker 2: There are so many uncertainties here. So much is such

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Speaker 2: a fluid situation. Let's start with the Red Sea. What's

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Speaker 2: the status of shipping in the Red Sea? Is everybody

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Speaker 2: diverting or people taking their chances? Where are we?

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Speaker 8: Well?

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Speaker 9: You had as as you heard you had over the

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Speaker 9: last few weeks.

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Speaker 10: You had the houthy militants in Yemen, which are backed

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Speaker 10: by Iran and funded and armed by Iran, attacking vessels

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Speaker 10: in the Middle in the Red Sea, vessels Israeli flagged ships,

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Speaker 10: but also commercial ships of all times, in order to

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Speaker 10: create trouble, in order to destabilize things, and frankly, it

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Speaker 10: is kind of an effort on the part of Iran

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Speaker 10: really to destabilize things without declaring it all out or

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Speaker 10: and instigating a response from the United States at least

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Speaker 10: major response. And so we had shipping companies say that

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Speaker 10: they were going to divert traffic around around Africa, which

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Speaker 10: is we all know would increase costs majorly and then

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Speaker 10: also and also create delay times, could contribute to global

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Speaker 10: inflation and so on.

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Speaker 9: And so the US responded was saying, you know.

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Speaker 10: What, we're creating an international navy coalition. And so the

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Speaker 10: United States has it has a number of countries that

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Speaker 10: have participated in that in order to patrol, if you will,

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Speaker 10: the Red Sea and the Suez Canal to continue to

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Speaker 10: allow shipping.

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Speaker 9: And so they've created it.

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Speaker 10: We don't have all the details on how many vessels

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Speaker 10: or ships are there from the United States and which

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Speaker 10: countries but we do know that it has already diminished

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Speaker 10: the risk. It hasn't decreased it entirely or eliminated it entirely, but.

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Speaker 9: It has decreased the risk.

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Speaker 10: And already you have as of yesterday, some shipping companies

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Speaker 10: like Marisk for example, have announced that they're going to

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Speaker 10: resume shipping through the Red Sea and the sews Canal.

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Speaker 10: Not all of them yet, but I expect as people

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Speaker 10: see that things are tad commer that are going to

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Speaker 10: resume shipping entirely.

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Speaker 6: So maybe that takes off some of the anxiety that

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Speaker 6: we've seen from a price perspective, shown in oil prices. However,

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Speaker 6: the conflict, as we see it, all of this stemming from,

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Speaker 6: of course, conflict between Hamas Israel, and I'm interested, of

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Speaker 6: course in ultimately how you see that particularly ramping up

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Speaker 6: because it has been increased concerns particularly around Iran visa

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Speaker 6: VI Israel. How we seeing that particularly ratcheting up its

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Speaker 6: concerns for you as well?

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Speaker 10: Yeah, I don't see any let up in that conflict

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Speaker 10: or in the aggression pursued by Israel, and by the way,

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Speaker 10: also the aggression pursued by Hamas in this conflict. There

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Speaker 10: have been since last week a number of efforts to

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Speaker 10: try and reopen a truce. The Israeli president offered a

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Speaker 10: one week truce in exchange for another round of hostage

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Speaker 10: and prisoner exchanges. Then Egypt has come up with a

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Speaker 10: very ambitious plan that I don't think will stick, for

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Speaker 10: a more permanency spire that would include even and not

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Speaker 10: only releasing hostages, but also changing the power structure in

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Speaker 10: Gaza to include one that's a technocratic Palestinian government and

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Speaker 10: not one led by Hamas, which Hamas outright and rejected.

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Speaker 10: Amasa has outright rejected both both offers of these ceasefires. Now,

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Speaker 10: I do think that you're going to see small humanitarian

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Speaker 10: lauses and truces that are short in nature again, because

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Speaker 10: we know that Hamas and the Israeli government have agreed

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Speaker 10: in principle already two humanitarian causes that yield a Palestinian

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Speaker 10: prisoner slash hostage Israeli hostage exchange.

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Speaker 9: So I bet we'll see that again.

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Speaker 10: But in the meantime, until that happens, the Israeli government

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Speaker 10: and Natanya, who has been very public about this, have

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Speaker 10: said that there's really no let up. Nata Yah, who

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Speaker 10: just yesterday or two days ago said that there is

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Speaker 10: no stop to what we're seeing on the ground in Gaza.

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Speaker 10: And I will tell you in my own experience when

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Speaker 10: I worked at the White House working on conflicts, including

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Speaker 10: past conflicts between Israel and Tamas, these wars are short

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Speaker 10: in the grand scheme of wars, and so I don't

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Speaker 10: expect it to last at this intensely past the new year.

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Speaker 10: I mean into the new year, maybe a month or so,

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Speaker 10: but after that I expect somewhere around February it'll die down,

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Speaker 10: but it will not stop until the Israeli government really

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Speaker 10: gets at the heart of Hamas's leadership in han Yunis

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Speaker 10: in the South, Goazagara.

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Speaker 2: What's the support for President Netanyahu at this point, and

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Speaker 2: I guess by extension just the overall war effort here.

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Speaker 2: Where are we in that right now?

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Speaker 9: That's a great question.

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Speaker 10: Israelis have really spoken very loudly against against Netanyahu, and

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Speaker 10: by the way, they were speaking loudly against him before

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Speaker 10: before October seventh, because of his own corruption scandals, because

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Speaker 10: of how he was trying to overhaul the judiciary inside

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Speaker 10: Israel in order to protect himself from these corruption investigations,

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Speaker 10: and so there was already a lot of animosity toward him,

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Speaker 10: a lot of protests against him, and this is only

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Speaker 10: increased that sentiment further because a lot of his policies

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Speaker 10: created the vulnerabilities that Hamas took advantage of when they

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Speaker 10: went and pursued their horrific terrorist attack on October seventh.

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Speaker 9: But that said, they are in the middle of this

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Speaker 9: intense war.

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Speaker 10: And so while you have what seems to be a

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Speaker 10: majority of Israelis, and there's been a lot of Israeli

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Speaker 10: polling on that against Natanya Who add more in favor

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Speaker 10: of Benny Gantz, who is in the wartime cabinet. I

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Speaker 10: don't expect Natanya Who to leave or resign or be

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Speaker 10: forced out at this moment. But like I said, when

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Speaker 10: those intense operations slow down a bit, which I expect

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Speaker 10: sometime after the new year, that's when the Israelis will

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Speaker 10: turn and say, all right, now it's time to kick

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Speaker 10: Natanya Who out, and I expect Benny Gantz to be

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Speaker 10: put in place.

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Speaker 6: Hega, what then of the administration, we of course are

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Speaker 6: heading towards an election in twenty twenty four. With your

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Speaker 6: twelve years of experience of working within government, what will

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Speaker 6: the response level end up being from the White House

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Speaker 6: at the moment.

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Speaker 10: I don't expect the position of the White House when

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Speaker 10: it comes to calling for a ceasefire or to place

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Speaker 10: conditions on USA to Israel to change at all. And

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Speaker 10: some of it could be because they're banking on the

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Speaker 10: fact that it will be short lived, and it will be,

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Speaker 10: like I said, the grand scheme of how wars go

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Speaker 10: around the world and in history, these wars between Israel

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Speaker 10: and Hamas tend to be relatively short and so they

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Speaker 10: may be banking on that. But a lot of it

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Speaker 10: really does stem from a genuine desire to defeat Hamas completely,

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Speaker 10: a belief that the Israeli government can do so. And

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Speaker 10: by the way, I agree with that, given that we

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Speaker 10: saw it happen with the international Coalition against Isis, that

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Speaker 10: might not mean that they could eradicate Hamas completely the

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Speaker 10: way in Etanyahu says, But defeating Hamas and its military

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Speaker 10: and governing capabilities is a real achievable goal in my opinion,

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Speaker 10: and you can see that the Biden administration wants that,

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Speaker 10: and they also don't want to show any kind of

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Speaker 10: lack of support for Israel at this time, and that's

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Speaker 10: why they're not going to place additional conditions that already

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Speaker 10: exist on the weaponry equipment vehicles going going to Israel.

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Speaker 10: That said, you do see them heightening this rhetoric on

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Speaker 10: the US side, calling on Israel to really limit or

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Speaker 10: avoid civilian casualties at all costs, to be as targeted

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Speaker 10: as possible, to transfer to low intensity operations.

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Speaker 9: And that's because not only is.

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Speaker 10: That morally the right thing to do, but in terms

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Speaker 10: of the strategic goal of a broader, secure Israeli state

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Speaker 10: that harming civilians this way, killing them this way, doesn't

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Speaker 10: help them achieve that goal. As Lloyd Austin says, Secretary

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Speaker 10: of Austin, it would replace a tactical victory with a

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Speaker 10: strategic defeat. And that's why you see the US continuing

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Speaker 10: to advise them this way.

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Speaker 2: So are the Middle East is not the only hot

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Speaker 2: spot out there. We still have the war in Ukraine.

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Speaker 2: And I spoke to Admiral James Tervitas a couple of

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Speaker 2: weeks ago, the former NATO chairman, and he said, basically,

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Speaker 2: he just returned from Korea and he said what he

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Speaker 2: believes is going to have to happen in Ukraine is

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Speaker 2: what happened in Korea in nineteen fifty two or fifty three,

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Speaker 2: which is basically swapping land for peace. Is there any

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Speaker 2: feeling in that part of the world that that's even

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Speaker 2: on the table or as possible? What's update?

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Speaker 10: Well, it's not the feeling certainly coming from Ukraine, and

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Speaker 10: it's not entirely yet the feeling in Europe, though you

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Speaker 10: see things starting to become a little bit awkward or uncomfortable,

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Speaker 10: if you will, so on that. So, first of all,

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Speaker 10: I'm so glad you're asking about Ukraine, because nobody is

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Speaker 10: really and just because the attention has diverted to Israelkauz,

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Speaker 10: it does not mean that the war there has led

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Speaker 10: up at all.

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Speaker 9: Things there seem to be in somewhat of a stalemate.

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Speaker 10: Though I have to really stress that while we see

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Speaker 10: a lot of press articles saying that Ukraine is losing

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Speaker 10: its counter offensive, that is not true. In July, Ukraine

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Speaker 10: had regained fifty percent of the territory that Russia had

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Speaker 10: seized since February twenty twenty two.

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Speaker 9: And that is significant.

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Speaker 10: That said, they are running out of ammunition and we

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Speaker 10: know that, and Presidence Zelenski came to the United States

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Speaker 10: and pleaded to Congress for more aid. A lot of

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Speaker 10: experts say that they'll run out by March. Now that said,

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Speaker 10: I do believe at the beginning of this year, at

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Speaker 10: the beginning of twenty twenty four, that Congress will pass

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Speaker 10: a new round of aid for Ukraine, for Israel, and

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Speaker 10: also for the southern border, which has been which is

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Speaker 10: what Republicans have said is holding up a They want

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Speaker 10: to compromise on that. President Biden has said he's going

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Speaker 10: to compromise on that, and I think they will. I

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Speaker 10: think they'll come to an agreement. But that said, it

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Speaker 10: shows that things are becoming more difficult in the garnering

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Speaker 10: support for Ukraine. And that is in part because if

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Speaker 10: it's an election year, Americans are growing a bit more weary.

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Speaker 10: Not the majority, but but a lot are growing more

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Speaker 10: weary of support for Ukraine. Obviously, you have inflation, and

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Speaker 10: in Europe you're seeing the same. The Hungarian Prime Minister

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Speaker 10: Victor Orbon he got in the way of the EU

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Speaker 10: sending another aid package to Ukraine. The EU requires consensus

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Speaker 10: of all of its twenty seven member states in order

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Speaker 10: to pass something.

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Speaker 9: Like that, and so you're seeing difficulties arise.

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Speaker 10: Like I said, they will get there across the finish

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Speaker 10: line in the new year. But given how difficult it's becoming,

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Speaker 10: I'm not surprised that you're starting to see leaders say, hey,

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Speaker 10: we don't want to leave Ukraine in the lurk like this,

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Speaker 10: and so maybe we need to start considering how to

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Speaker 10: lay the ground up for negotiations and position Ukraine in

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Speaker 10: as strong a position as possible.

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Speaker 2: Grey, thanks so much for joining us. Really really appreciate

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Speaker 2: getting your perspective for Ur Shamali, CEO and founder of

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Speaker 2: Greenwich Media Strategies. She's also an adjunct professor at Columbia

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Speaker 2: University School of International Public Affairs and a non resident

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Speaker 2: Senior Fellow at the Atlantic Council's at Geoeconomic Center.

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Speaker 7: You're listening to the tape Can's are Live program Bloomberg

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Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 7: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

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Speaker 6: We want to be bringing in Jennifer Lee, senior economist

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Speaker 6: at Remote Capital Markets, and Jennifer It has been an

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Speaker 6: extraordinary year. If you think about the way in which

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Speaker 6: basically every economists got it wrong in the direction of travel, well,

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Speaker 6: how far we'd go in terms of boring costs going high.

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Speaker 6: They never anticipated quite the ramp up.

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Speaker 5: But now every.

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Speaker 6: Economist thinking that we're going to be cutting an extraordinary

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Speaker 6: debate degree. Well, the market see at least one point

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Speaker 6: five paces, well one hundred and fifty basis points one

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Speaker 6: point five percent for the next year. We feel as

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Speaker 6: though the market's getting ahead of itself when it comes

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Speaker 6: to overall federal reserve policy or what do you make

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Speaker 6: of it?

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Speaker 8: Good morning, and thank you for having me on. Yes,

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Speaker 8: I think the.

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Speaker 11: Market is a little bit ahead of itself, to put

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Speaker 11: it gently. Uh, there's still some talk about, you know, earlier,

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Speaker 11: earlier rate cuts for the federal reserve. But I don't

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Speaker 11: see how that's going to happen. You know, it's sort

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Speaker 11: of something dramatic happening. You know, we don't look, but

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Speaker 11: we do look. We do look for rate cuts to

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Speaker 11: come around the middle part of the year, at about

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Speaker 11: one hundred basis points in total. It's just we've gotten

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Speaker 11: so much momentum still building up. I mean, even though

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Speaker 11: we saw three quarter growth and it seems like forever ago,

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Speaker 11: you know, revised down last week for two four point

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Speaker 11: nine percent. That's still a heck of a strong number.

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Speaker 11: You know, there's nobody denying that. And that was, by

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Speaker 11: the way, the very first estimate that that the BA

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Speaker 11: came out was was four point nine percent. So four

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Speaker 11: point nine percent Q four so far, you know, we've

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Speaker 11: seen signs of slowing, but there is still a lot

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Speaker 11: of momentum.

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Speaker 8: And you know, we again it seems like for hour ago.

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Speaker 11: But just last week we saw the personal spending and

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Speaker 11: income data bully cow still very strong. You zero point

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Speaker 11: three percent real spending and it was basically across the board.

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Speaker 8: And I always look.

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Speaker 11: At the key things you know, that people could be

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Speaker 11: spending on or would not be spending on if they're

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Speaker 11: really really worried, and there's still more spending on dining out.

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Speaker 11: There's a lot more spending on recreational goods and vehicles

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Speaker 11: things like that that you know, if things were really

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Speaker 11: really tough, you wouldn't be doing all that, And there's

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Speaker 11: still some spending on that front. So we are still

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Speaker 11: seeing some decent momentum moving into the fourth court, into

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Speaker 11: the turn of the year. So again, earlier rate cuts

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Speaker 11: I think are just overblown.

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Speaker 8: Those those those that sort of talk interesting.

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Speaker 6: So if we do see still a lot resilience, if

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Speaker 6: we do see ultimately also maybe wage inflation being sustained,

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Speaker 6: do you do you ultimately think that the FED will

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Speaker 6: have to become more joined up in its approach messaging

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Speaker 6: as well, because that's where the whiplash seems to be

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Speaker 6: coming in. We have FED chair Pale speaking of perhaps

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Speaker 6: this necessity to start cutting in twenty twenty four, and

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Speaker 6: then a couple of FED speak come out and try

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Speaker 6: and weel us back in terms of how far how

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Speaker 6: fast are we getting a consistent message?

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Speaker 11: Up until last up until recently, I would say yes,

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Speaker 11: But now it's like I.

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Speaker 8: Don't know what to happen at FED meeting.

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Speaker 11: But you know, obviously Fed Tairpal I feel took you know,

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Speaker 11: through the markets for a loop when he you know,

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Speaker 11: started talking about the fact that ray cuts had entered

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Speaker 11: the discussion, you know, and he didn't really push back

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Speaker 11: on too much of the questioning that he got during

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Speaker 11: the uh uh, during the Q and A. So that's

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Speaker 11: why we saw that parade of every single I believe

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Speaker 11: it was every single FED official coming out shortly after

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Speaker 11: saying hold up, way too soon. Discussion of earlier raitcuts

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Speaker 11: is too premature. You know, we still have to see

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Speaker 11: a lot more data. Everything is going you know, again,

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Speaker 11: we're looking at the totality the data, as we keep

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Speaker 11: talking about all the time, and I think there's going

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Speaker 11: to be a lot more of that before we can

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Speaker 11: see the official rate cuts. But you know, it's going

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Speaker 11: to you know, we do believe it's going to happen

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Speaker 11: again mid part of twenty twenty four, which is around

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Speaker 11: the corner at this point. But the fact that you know, things.

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Speaker 9: Are slowly, slowly, slowly slowing.

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Speaker 11: And the fact that inflation is coming down, you know,

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Speaker 11: it's a good place to be in right now. And

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Speaker 11: this is something that I don't think any of us

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Speaker 11: would have anticipated a year ago.

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Speaker 2: So, Jennifer, can we officially take the recession talk off

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Speaker 2: the table?

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Speaker 11: We were I'm going to say this again, we've always

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Speaker 11: been in that soft landing category and we had I

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Speaker 11: think a negative print on one point last year, but

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Speaker 11: we took that all out. You know, again, this is

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Speaker 11: like the whole soft landing, no landing, any landing kind

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Speaker 11: of scenario. You know, we still see things slowing obviously

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Speaker 11: around the turn of this year, and of you know,

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Speaker 11: this is going to prompt those FED rate cuts to

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Speaker 11: come along around June.

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Speaker 8: Or around June.

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Speaker 11: So but I don't think a hard landing or actual

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Speaker 11: recession is right now. Looks like it's in the cards,

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Speaker 11: but you know, things can change very very quickly. A

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Speaker 11: lot of still a lot of uncertainty that's playing out

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Speaker 11: out there as the as twenty twenty four begins, So

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Speaker 11: we'll see how all that plays out. But as of

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Speaker 11: right now, you know, we are not looking for an

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Speaker 11: actual full fledged recession.

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Speaker 2: Jennifer, I don't know, just in my opinion, I think

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Speaker 2: the Fed's done a decent job here, I mean, coming

441
00:21:25,560 --> 00:21:28,000
Speaker 2: out of a pandemic. But you don't they didn't teach

442
00:21:28,080 --> 00:21:31,480
Speaker 2: in business school. Maybe a little bit late, okay, I'll

443
00:21:31,480 --> 00:21:33,399
Speaker 2: give you that, but by and large they seems to

444
00:21:33,440 --> 00:21:36,760
Speaker 2: have managed this thing pretty well. If in fact, we

445
00:21:36,840 --> 00:21:39,320
Speaker 2: do get a soft landing. What's your feeling here is

446
00:21:39,359 --> 00:21:40,880
Speaker 2: now we have a little bit of hindsight.

447
00:21:42,640 --> 00:21:44,359
Speaker 8: I'm going to one hundred percent agree with you of that.

448
00:21:44,440 --> 00:21:46,600
Speaker 11: I mean the fact that again we are at this

449
00:21:46,720 --> 00:21:49,879
Speaker 11: stage at the last you know, the last few days

450
00:21:49,920 --> 00:21:52,680
Speaker 11: of December of twenty twenty three, and that whole soft

451
00:21:52,760 --> 00:21:55,320
Speaker 11: landing narrative is still complaint can continue to play out,

452
00:21:55,359 --> 00:21:57,640
Speaker 11: and more and more people have hopped on it over

453
00:21:57,680 --> 00:22:00,399
Speaker 11: the last few months. And this is something I guess,

454
00:22:00,440 --> 00:22:02,040
Speaker 11: you know, again, no one would imagine, you know, in

455
00:22:02,119 --> 00:22:05,520
Speaker 11: unemployment it's still very very tight. Wage growth is still

456
00:22:06,000 --> 00:22:07,920
Speaker 11: on the rise, you know, but not as hot as

457
00:22:07,920 --> 00:22:10,760
Speaker 11: it was was. So this is you know, dare I say,

458
00:22:10,800 --> 00:22:14,520
Speaker 11: it's almost goldilocks ish, you know, this is something that

459
00:22:14,560 --> 00:22:16,920
Speaker 11: the FED is totally welcoming. And for sure it seems

460
00:22:16,920 --> 00:22:18,800
Speaker 11: like they've done a great job. And the fact that

461
00:22:19,080 --> 00:22:21,680
Speaker 11: the US economy remains resilience after over five hundred and

462
00:22:21,720 --> 00:22:25,400
Speaker 11: twenty five basis points of great hikes is pretty darn good.

463
00:22:25,440 --> 00:22:28,320
Speaker 11: I mean, this is I think they should be giving

464
00:22:28,320 --> 00:22:30,320
Speaker 11: themselves a pad on the back. But again, it ain't

465
00:22:30,359 --> 00:22:33,160
Speaker 11: over until it's over, and we're gonna have to see

466
00:22:33,200 --> 00:22:35,959
Speaker 11: how you know, twenty twenty four plays out. Still if

467
00:22:36,000 --> 00:22:38,760
Speaker 11: we start seeing more signs of potential, you know, more

468
00:22:39,240 --> 00:22:42,160
Speaker 11: heavier breaking I guess on the economic momentum front.

469
00:22:42,280 --> 00:22:44,800
Speaker 6: And let's just talk about some of those risk factors

470
00:22:45,160 --> 00:22:47,080
Speaker 6: not to be a Debbie Downer at the end of

471
00:22:47,080 --> 00:22:50,119
Speaker 6: the conversation, But just tell us a little bit about

472
00:22:50,119 --> 00:22:52,800
Speaker 6: what is it that you think could pull back a

473
00:22:52,840 --> 00:22:55,720
Speaker 6: consumer at this moment which does seem to be so resilient.

474
00:22:55,840 --> 00:22:58,280
Speaker 6: Is it geopolitics, is it tensions in the Middle East?

475
00:22:58,280 --> 00:23:00,480
Speaker 6: What is it that suddenly up ends some of these

476
00:23:00,560 --> 00:23:02,520
Speaker 6: rosier viewpoints when it comes to self landing.

477
00:23:03,320 --> 00:23:04,520
Speaker 8: I want to say all of the above.

478
00:23:04,520 --> 00:23:08,280
Speaker 11: I mean, if consumer starts seeing more signs of you know, potential,

479
00:23:08,440 --> 00:23:11,840
Speaker 11: even like supply chain issues coming back into the mix.

480
00:23:11,920 --> 00:23:13,840
Speaker 11: You know, China's opening again and all that, so that's fine,

481
00:23:13,880 --> 00:23:15,960
Speaker 11: But then now we've got everything that's happening in the

482
00:23:16,000 --> 00:23:19,919
Speaker 11: Red Sea. There's a story this morning about about Europe,

483
00:23:19,920 --> 00:23:22,280
Speaker 11: you know, trying to create its own battery chain you

484
00:23:22,320 --> 00:23:26,840
Speaker 11: know scenario, and it's having problems sourcing sourcing supplies or

485
00:23:26,840 --> 00:23:29,520
Speaker 11: components because of you know, a competition from the US.

486
00:23:29,920 --> 00:23:31,879
Speaker 11: So that could also throw a wrench into that. And

487
00:23:31,960 --> 00:23:35,400
Speaker 11: of course, as you mentioned geopolitics, you know, the war

488
00:23:35,600 --> 00:23:38,960
Speaker 11: in Ukraine, of course, the conflict in the Middle East.

489
00:23:39,240 --> 00:23:41,520
Speaker 11: If that ramps up. We also have a number of

490
00:23:41,520 --> 00:23:43,960
Speaker 11: elections coming up in the in twenty twenty four. We

491
00:23:44,040 --> 00:23:46,400
Speaker 11: have you know, you know, not the political expert, of course,

492
00:23:46,400 --> 00:23:49,119
Speaker 11: but we've got Taiwan coming up in January, and of

493
00:23:49,119 --> 00:23:52,359
Speaker 11: course the you know whole series of European elections during

494
00:23:52,400 --> 00:23:54,520
Speaker 11: the year, and then of course we've got the US

495
00:23:54,560 --> 00:23:56,840
Speaker 11: coming up in November, and all of these could throw

496
00:23:57,119 --> 00:23:58,359
Speaker 11: a big wrench and all this.

497
00:23:59,119 --> 00:24:00,720
Speaker 8: I always like to look at climate as well.

498
00:24:00,760 --> 00:24:03,119
Speaker 11: I mean, this is something that seemed like a you know,

499
00:24:03,160 --> 00:24:05,359
Speaker 11: a very far away to story many you know, a

500
00:24:05,359 --> 00:24:07,720
Speaker 11: couple of years ago, but it's still very much now.

501
00:24:07,760 --> 00:24:08,800
Speaker 8: It's very much here.

502
00:24:09,040 --> 00:24:11,880
Speaker 11: We can see it from you know, here in Toronto

503
00:24:11,880 --> 00:24:13,840
Speaker 11: we have like a green Christmas, which is something I

504
00:24:13,880 --> 00:24:16,920
Speaker 11: haven't seen in a long time. This is all could

505
00:24:16,960 --> 00:24:19,720
Speaker 11: potentially add to the whole inflationary pressures in the terms

506
00:24:19,720 --> 00:24:22,000
Speaker 11: of how it affects food prices for example.

507
00:24:22,480 --> 00:24:25,080
Speaker 2: All right, jeniferly, thanks so much for joining us. Jennifer

508
00:24:25,119 --> 00:24:28,560
Speaker 2: Leeve from a Bank of Montreal Beimo as we know

509
00:24:28,640 --> 00:24:30,560
Speaker 2: it in the trade. You giving us her thoughts on

510
00:24:30,720 --> 00:24:33,920
Speaker 2: this economy looks like a pretty solid soft landing. At

511
00:24:33,920 --> 00:24:34,520
Speaker 2: this point.

512
00:24:34,760 --> 00:24:38,400
Speaker 7: You're listening to the Tape Can't Live program Bloomberg Markets

513
00:24:38,440 --> 00:24:41,879
Speaker 7: weekdays at ten am Eastern on Bloomberg Radio, the tune

514
00:24:41,880 --> 00:24:44,840
Speaker 7: in app, Bloomberg dot Com, and the Bloomberg Business app.

515
00:24:44,880 --> 00:24:47,720
Speaker 7: You can also listen live on Amazon Alexa from our

516
00:24:47,720 --> 00:24:52,800
Speaker 7: flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

517
00:24:53,880 --> 00:24:55,480
Speaker 5: Judy Van Allen is joining us.

518
00:24:55,600 --> 00:24:59,679
Speaker 6: She's chief revenue officer at Recruiting Rewards now rocketing.

519
00:25:00,200 --> 00:25:02,640
Speaker 5: I'm thinking of cash back, I'm thinking of coupons.

520
00:25:02,680 --> 00:25:04,679
Speaker 6: I'm thinking though, of you being able to track consumer

521
00:25:04,760 --> 00:25:08,879
Speaker 6: sentiment as it stands online in particular, and Julie, is

522
00:25:08,960 --> 00:25:11,960
Speaker 6: the consumer as resilient as it was this time last

523
00:25:12,040 --> 00:25:13,800
Speaker 6: year when it comes to e commerce purchasing.

524
00:25:15,200 --> 00:25:16,240
Speaker 9: It's a great question.

525
00:25:16,480 --> 00:25:20,200
Speaker 4: And first, it was a massive holiday season, especially for

526
00:25:20,680 --> 00:25:28,439
Speaker 4: brands like US who cultivate great loyalty the incentives, rewards, discounts, coupons.

527
00:25:28,840 --> 00:25:32,080
Speaker 4: But unlike the last couple of holiday shopping seasons, we

528
00:25:32,440 --> 00:25:34,680
Speaker 4: had to wait until the very last minute to see

529
00:25:34,720 --> 00:25:38,240
Speaker 4: those consumer dollars flow through, which is obviously a scary

530
00:25:38,280 --> 00:25:42,000
Speaker 4: moment when you consider how much spend flows through Q four. Normally,

531
00:25:42,680 --> 00:25:46,560
Speaker 4: last couple of years, shopping really started in October November

532
00:25:46,920 --> 00:25:50,720
Speaker 4: in earnest. This year, it really started on Cyber Week

533
00:25:51,320 --> 00:25:55,320
Speaker 4: which we kind of anticipated would happen and luckily did happen,

534
00:25:55,800 --> 00:25:58,399
Speaker 4: knowing that consumers would likely be waiting for the best

535
00:25:58,440 --> 00:26:02,600
Speaker 4: possible deals. But what I will say is particularly interesting

536
00:26:02,720 --> 00:26:05,879
Speaker 4: is that because consumers waited, there was a lot of

537
00:26:05,960 --> 00:26:09,600
Speaker 4: pent up demand that rolled into December. But that made

538
00:26:09,600 --> 00:26:13,320
Speaker 4: it quite hard for many retailers and brands to sustain

539
00:26:13,400 --> 00:26:17,000
Speaker 4: that sort of promotional activity through end of year. So

540
00:26:17,080 --> 00:26:20,159
Speaker 4: some were smart with their budgets, some less smart, and

541
00:26:20,200 --> 00:26:22,040
Speaker 4: it did really create some winners and losers.

542
00:26:22,840 --> 00:26:25,160
Speaker 5: Okay, let's talk about the winners who won.

543
00:26:27,320 --> 00:26:29,679
Speaker 4: From a category standpoint, I would say there are some

544
00:26:29,800 --> 00:26:35,000
Speaker 4: interesting things. Travel really did quite well, ostensibly because consumers

545
00:26:35,080 --> 00:26:38,760
Speaker 4: were waiting for the best deals on high price point purchases.

546
00:26:39,560 --> 00:26:41,520
Speaker 4: We thought electronics would.

547
00:26:41,359 --> 00:26:42,159
Speaker 9: Be a big winner.

548
00:26:42,960 --> 00:26:43,720
Speaker 8: Not so much.

549
00:26:44,440 --> 00:26:47,040
Speaker 4: They did start to come back a little bit in December,

550
00:26:47,080 --> 00:26:50,239
Speaker 4: but given those are discretionary purchases, we did think that

551
00:26:50,280 --> 00:26:54,679
Speaker 4: those dollars would wait for the big deals to occur.

552
00:26:55,480 --> 00:27:00,560
Speaker 4: Apparel was another one that wasn't so super sense again,

553
00:27:00,640 --> 00:27:04,840
Speaker 4: because that's a bit discretionary. People aren't gifting apparel as much.

554
00:27:04,880 --> 00:27:07,239
Speaker 4: It's more something for yourself that you might want and

555
00:27:07,320 --> 00:27:11,840
Speaker 4: not need. On the other hand, we saw incredible growth

556
00:27:11,880 --> 00:27:18,639
Speaker 4: coming out of department stores, marketplaces, footwear, toys. So really

557
00:27:18,680 --> 00:27:21,639
Speaker 4: apparel and electronics was the only two that were a

558
00:27:21,680 --> 00:27:22,720
Speaker 4: tad lackluster.

559
00:27:22,840 --> 00:27:26,000
Speaker 2: I'll say, well, against my better judgement, Caroline, I bought

560
00:27:26,000 --> 00:27:29,040
Speaker 2: an Xbox for one of my offspring and I did

561
00:27:29,040 --> 00:27:33,080
Speaker 2: it begrudgingly, but he had a pretty good year.

562
00:27:34,000 --> 00:27:34,400
Speaker 3: All right.

563
00:27:34,560 --> 00:27:38,000
Speaker 2: So, Julie, I mean, how do we feel about the

564
00:27:38,000 --> 00:27:40,320
Speaker 2: consumer here, because I'm not sure how the consumer's paying

565
00:27:40,359 --> 00:27:42,800
Speaker 2: for all this stuff? Is what are the retailers telling

566
00:27:42,800 --> 00:27:44,240
Speaker 2: me about credit and that type of thing.

567
00:27:45,920 --> 00:27:48,800
Speaker 4: Yeah, So, I mean we see consumers spending, right, you know,

568
00:27:48,880 --> 00:27:51,160
Speaker 4: you just you just listed the stats for us there.

569
00:27:51,200 --> 00:27:53,960
Speaker 4: But I think we have to remember that consumers are spending,

570
00:27:54,160 --> 00:27:56,400
Speaker 4: but they're looking for the best value.

571
00:27:56,600 --> 00:28:00,720
Speaker 9: So, but that's really putting brand loyalty in questions.

572
00:28:00,720 --> 00:28:03,000
Speaker 4: So you see a lot of retailers and brands really

573
00:28:03,000 --> 00:28:05,520
Speaker 4: scrambling to try to figure out what does this mean

574
00:28:05,640 --> 00:28:07,120
Speaker 4: for how they retain.

575
00:28:07,200 --> 00:28:08,520
Speaker 9: Shoppers going forward.

576
00:28:08,960 --> 00:28:12,800
Speaker 4: And while there are certainly signs of inflation cooling, I

577
00:28:12,840 --> 00:28:15,760
Speaker 4: think that there are many facets of our current economy

578
00:28:16,119 --> 00:28:18,919
Speaker 4: political landscape. A lot going to be happening in the

579
00:28:18,960 --> 00:28:22,080
Speaker 4: next year that are that's going to mean that consumers

580
00:28:22,119 --> 00:28:25,840
Speaker 4: are still very, very value driven, which is going to

581
00:28:25,880 --> 00:28:29,680
Speaker 4: create a challenge, a juxtaposition, if you will, for retailers,

582
00:28:29,720 --> 00:28:31,920
Speaker 4: who I think at the beginning of the year, you're

583
00:28:31,960 --> 00:28:34,840
Speaker 4: going to hear a lot of retailers looking to return

584
00:28:34,880 --> 00:28:37,520
Speaker 4: to health, which is going to mean they're looking for

585
00:28:37,640 --> 00:28:41,440
Speaker 4: better profit margins coming out of a very competitive, high

586
00:28:41,440 --> 00:28:42,800
Speaker 4: promotional QUE four.

587
00:28:43,320 --> 00:28:44,120
Speaker 9: But again that's.

588
00:28:44,200 --> 00:28:45,760
Speaker 2: Yeah, that's kind of where I want to go, Julie.

589
00:28:45,800 --> 00:28:48,360
Speaker 2: I mean, I hear a lot about consumers seeking value

590
00:28:48,360 --> 00:28:51,120
Speaker 2: and promotions and things, So what does that mean for

591
00:28:51,160 --> 00:28:52,120
Speaker 2: the retailer's margins.

592
00:28:53,480 --> 00:28:57,320
Speaker 4: It's a challenge, right, they are going they usually are

593
00:28:57,440 --> 00:28:59,600
Speaker 4: used to having to give quite a lot of way

594
00:29:00,200 --> 00:29:02,480
Speaker 4: for and then come Q one there's an ability to

595
00:29:02,720 --> 00:29:06,760
Speaker 4: recoup those healthy margins, and that's even more important now

596
00:29:06,800 --> 00:29:10,760
Speaker 4: coming off of COVID, when loyalty really look in question

597
00:29:10,840 --> 00:29:14,240
Speaker 4: and consumer and retailers have been spending spending to earn

598
00:29:14,280 --> 00:29:17,160
Speaker 4: back shoppers for the last couple of years, so this

599
00:29:17,280 --> 00:29:19,840
Speaker 4: return to health is important, and there are a couple

600
00:29:19,880 --> 00:29:22,440
Speaker 4: of things that they can do to meet a shopper

601
00:29:22,480 --> 00:29:28,160
Speaker 4: where they are while still offering incentives things like cash back.

602
00:29:28,280 --> 00:29:29,080
Speaker 8: Cash back is a.

603
00:29:29,040 --> 00:29:33,440
Speaker 4: Great lever for allowing a retailer to charge regular price

604
00:29:33,880 --> 00:29:37,400
Speaker 4: but create an incentive for a shopper. And even though

605
00:29:37,440 --> 00:29:39,160
Speaker 4: I know you said you didn't go in store too

606
00:29:39,280 --> 00:29:43,240
Speaker 4: much to shop this holiday season, that is a big

607
00:29:43,320 --> 00:29:48,560
Speaker 4: and growing arena, especially for younger shoppers. So another area

608
00:29:48,320 --> 00:29:53,560
Speaker 4: that retailers can think to invest is in incentivizing things

609
00:29:53,640 --> 00:29:56,680
Speaker 4: like buy online, pickup in store, where they can give

610
00:29:56,680 --> 00:30:00,520
Speaker 4: an incentive there but drive consumers to shop where they

611
00:30:00,560 --> 00:30:03,440
Speaker 4: know that they'll get additional purchases once those consumers are

612
00:30:03,480 --> 00:30:03,960
Speaker 4: in the store.

613
00:30:04,240 --> 00:30:05,960
Speaker 2: All right, Julie, thank you so much for joining us,

614
00:30:06,240 --> 00:30:08,480
Speaker 2: as I always appreciate getting a few minutes of your time.

615
00:30:08,560 --> 00:30:12,760
Speaker 2: Julie ben Allen. She is the chief revenue officer at

616
00:30:12,880 --> 00:30:17,080
Speaker 2: Racketon Rewards, giving us the latest lowdown on what has

617
00:30:17,120 --> 00:30:20,440
Speaker 2: been a pretty solid holiday shopping season.

618
00:30:21,040 --> 00:30:24,120
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can

619
00:30:24,160 --> 00:30:27,960
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever

620
00:30:28,040 --> 00:30:31,760
Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

621
00:30:31,960 --> 00:30:34,040
Speaker 1: at Matt Miller nineteen seventy three.

622
00:30:34,320 --> 00:30:36,680
Speaker 2: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney

623
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